The question of whether they can file suit is answered by the fact that they did. Whether the suit was legally filed remains to be unseen. The answer will be found in the details of your creditor-debtor relationship. Contact an attorney to discuss your possible claims. Do not delay as the passage of time will negatively affect your rights.
At most, you would have an FDCPA violation, but that won't nullify or dismiss the lawsuit.
You are correct, generally, when a request for validation is made, the debt collector must cease collection activity until they validate the debt (which means notifying you that they have validated the debt, name the creditor, and provide you the balance due). However, form the issue of timing, it may be hard to prove an intentional violation. Very likely, the lawsuit was already being prepared and ready to go at the time they received your letter, so a judge may cut the law firm some slack if the request wasn't processed.
But as stated, you might have an FDCPA violation, but that won't result in dismissal of the lawsuit.
Have they still not provided validation of the debt? While my colleagues are right about possible FDCPA violations, I would think your challenge to the validity of the debt means you possibly think it's not a valid debt. Ultimately the goal is to not pay a debt you don't think is valid. For an experienced debt collection defense attorney, such as myself, there are a number of ways to poke holes in the other side's case.
Ryan Ballard is licensed to practice law in Idaho. He can be reached by phone at 208-359-5532 or by email at email@example.com. His website is BallardLawIdaho.com. This answer is for informational purposes only. It is not intended as specific legal advice regarding your question. The answer could be different if all of the facts were known. This answer does not establish an attorney-client relationship.